Don't Bank on China's Rainy-Day Funds

Chinese banks are battening down the hatches. But preparations leave much to be desired, especially when no one knows how big a storm is brewing.

Over the past several months, Chinese banks' stocks have rallied strongly. From lows in late March, the five biggest state-owned banks are up about 18% to 22% in Hong Kong trading. This is partly attributable to relief among some that the Chinese economy isn't tanking, as Beijing's stimulus efforts fed through. Investors may also be cheered by signs that the banks are finally...